JUDGE RULES THAT GEMSTAR PATENTS WEREN'T INFRINGED
Gemstar was dealt serious setback late Fri. when ITC administrative law judge ruled that 3 of its patents for on-screen interactive program guides weren’t infringed. Judge Paul Luckern found that “no domestic industry” exists for patents, thus allowing EchoStar, Pioneer and Scientific-Atlanta (SA) to continue importing satellite receivers and cable set-top boxes. EchoStar, SA, and Pioneer all designed own IPGs for STBs and Gemstar filed complaint with ITC in 2001 seeking to block import of STBs it said had IPG that infringed on its patents.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
Luckern’s preliminary decision was a worst-case scenario for Gemstar, analysts said. While Luckern found that patents submitted for review were valid, he nevertheless ruled that companies didn’t infringe on them. In addition, Luckern found that Gemstar “misused” one of its patents -- so-called ‘'121’ patent for TV navigation -- and that it’s not enforceable for “failure to name a co-inventor.” Luckern’s decision means ITC is scheduled to complete investigation by Sept. 23.
Gemstar maintained that Luckern’s decision was “erroneous” that it wasn’t supported by “the proper application of law.” It said it will file request for review of Luckern’s decision by full commission. ITC will rule on request within 45 days, Gemstar said. “We are obviously disappointed by Judge Luckern’s ruling,” said Jonathan Orlick, Gemstar’s chief legal officer and gen. counsel. “Nevertheless, the Company is determined to continue to protect its intellectual properties and patents which crystallize our innovations and inventions. The ruling will not detract from the Company’s long-standing policy to assert patents against infringing parties, including those involved in the current ITC case.” Pioneer was “vindicated” by Luckern’s ruling and is “looking forward” to ending litigation, said Business Solutions Div. Pres. Paul Dempsey. SA and EchoStar officials weren’t immediately available for comment.
Ruling in Gemstar’s favor would have meant that companies would have had to redesign IPGs around its patents or sign licensing pact. While ruling in defendant’s favor may be “psychologically numbing” it also maintains status quo, analyst said. Indeed, companies have had STBs in field with own IPG for several years. Gemstar also has long-term IPG agreements with some MSOs including Charter and Comcast. Positive ruling would have brought $11-$13 jump in Gemstar’s stock price, said Deutsche Bank Securities analyst Karim Zia, who has $20 target for company’s shares. Gemstar shares, which once traded as high as $100, have been under pressure in recent months as they sank to $10 range due in part to weakness at company’s TV Guide magazine business and because of perceived feud between CEO Henry Yuen and News Corp.’s Rupert Murdoch, whos company has 42% stake in firm. Gemstar’s stock closed Fri. down 1.2% at $8.23. Gemstar and TV Guide combined operations in 2000.